They say that two types of people are the most dangerous in the stock market: those who know nothing and those who act like they know everything. The more important question is, who are the types of people that make the most money in the stock market? I would say they are those who have a very good understanding of how markets work and those who end up being right about something about which the majority of people are wrong.
If you want to achieve outsized returns, you have to do something that most people are not willing to do. If something feels psychologically difficult to do in the stock market, it is often the right thing to do. If it were easy, everyone would do it, and therefore the end result would not be anything spectacular.
Doing something that is psychologically difficult does not guarantee you success, but it does guarantee you outsized returns if you end up being right. The only way to make big money is to be right about something about which almost everyone else is wrong. If you are right about something about which everyone else is right, you will only achieve average returns. Sometimes being average is not a bad outcome, but we are striving for more than that, right?
What are some of the signs that other people are not on the same page as you? They will tell you. Your idea will seem so ridiculous to them that they will make fun of it. You know what? This is a really good sign. It means that you are onto something big. It means that if you are right, your payback will be huge. Being a contrarian doesn’t always work, but when it does the payoff is ginormous.
This is an excerpt from my new book – The Next Apple: How To Find Stocks That Could Go Up 1000%
